This article first appeared in The Edge Financial Daily on April 20, 2018

KUALA LUMPUR: The takeover battle for India’s cash-strapped Fortis Healthcare Ltd has just heated up as two of its four suitors upped their bids to gain control of the country’s second-largest hospital chain.

IHH Healthcare Bhd announced yesterday that it had on Wednesday issued a non-binding letter to Fortis to express its readiness to infuse up to 4,000 crore Indian rupees (RM2.35 billion) into Fortis via a preferential share allotment at a price not exceeding 160 rupees a share.

IHH said in a statement to Bursa Malaysia the plan forms part of IHH’s proposal to participate in Fortis and its affiliates. The healthcare operator explained that the infusion is intended to fund the buyout of the assets from RHT Health Trust as well as provide immediate liquidity towards working capital and infrastructure upgrades.

“The board of Fortis has acknowledged receipt of the letter and indicated that it is scheduled to meet on April 19, 2018 (yesterday) to consider all options. At this juncture, IHH has not entered into any discussions, negotiations or transactions,” said IHH.

“IHH will make appropriate announcement(s) to Bursa Malaysia Securities Bhd in a timely manner in accordance with the Main Market listing requirements of Bursa Securities should there be any further material development on this matter,” it said.

IHH advised its shareholders or investors to exercise caution and seek appropriate independent advice when dealing in the shares in IHH.

At 5pm yesterday, IHH’s share closed two sen or 0.33% higher at RM6.10, with 5.07 million shares, giving the healthcare group a market capitalisation of RM50.34 billion.

Meanwhile, Reuters reported that Fortis said it had received an improved binding offer worth 15 billion rupees from Hero Enterprise Investment Office and Burman Family Office yesterday. The proposal is higher than their offer of 12.5 billion rupees last week.

The consortium’s proposal is to invest five billion rupees via preferential issue of equity shares and 10 billion rupees through issue of warrants, Fortis said in a statement.

Fortis, which runs about 30 hospitals across India, has become the target of a takeover battle between IHH, local rival Manipal Health Enterprises Pvt Ltd, Hero-Burman and China’s Fosun International Ltd. The company’s board was set to meet yesterday to “consider all the options”, Fortis said.

Hero Enterprise is an investment company formed by Sunil Munjal, who belongs to the family that runs Hero Motocorp Ltd, which is listed on the National Stock Exchange of India (NSE) and is the country’s largest two-wheeler manufacturer. The Burman Family Office is the private investment arm of the family that owns consumer goods company Dabur India Ltd, which is listed on the Bombay Stock Exchange and NSE.